Insight

Navigating Complex Business Decisions with The Cynefin Framework

Complexity in Current Business Environment

Today, organizations are forced to build resilience against numerous events that threaten the continuity of their business processes (Sahebjamnia et. al. 2018). Business environment of the global drives emerging enterprises and companies to transform their business models. It encourages new inventions and advanced technology implementation in business operations in order to keep up with the market's demands. As a result, the economy has become more global than ever. However, the global business era also enforced business leaders to become responsive and adaptive in extreme turnabouts. A clear example of the extreme situation happened during the COVID-19 outbreak. Large-scale disruptions increase the uncertainty and risk to the global business environment. While countries have generally strengthened prevention and control measures against COVID-19, their normal production operations have been affected causing a lot of threats to business and hampering the sustainable development of the countries (Chen, Ji, et. al. 2021).

How Business Leaders Resolve the Complex Business Environment

Business leaders become aware of the importance of risk management and put immerse effort in implementing risk management to secure their business. Business Continuity Management (BCM), for example, has become an essential technical solution for enterprise emergency response (Chen, Ji, et. al. 2021). Zsidisin et al. (2005) highlighted the importance of developing business continuity plans by addressing key concepts such as risk, uncertainty, and exposure. Whereas business continuity is generically aimed to preserve the value that an organization provides with current activities, with business model innovation the organization is deliberately altering the core elements of its model as a way to develop a new-to-business model (Bucherer et al.,2012; Heikkila ̈ et al., 2018; Pohle & Chapman, 2006). However, some businesses failed to engage in BCM during the plan development process, resulting in ineffective BCM practices. In order to be effective, BCM must adopt a holistic approach to dealing with the issues that face organizations (Smith, Denis Fischbacher. 2017).

Introducing The Cynefin Framework: The History and Background

Volatility and complexity factors determine the management and decision-making approach in businesses. The Cynefin Framework has been used in a range of contexts to support decision-making in dynamic and challenging situations (Mitka, Gorzen Iwona. 2014).

The Cynefin (pronounced “kuh-nev-in”) Framework was first introduced by Dave Snowden during his time of employment at IBM. Cynefin is a Welsh word that means habitat or place of many belongings. Snowden recognized that most research deals with situations and problems that are complicated and benefit from efforts to simplify them and bring order. Researchers tend to avoid situations and problems that are really complex and which are distorted by such efforts. Complicated systems, although composed of many intricate parts, can be understood overtime by careful examination so that their future behavior can be predicted. Complex systems, on the other hand, are 'comprised of populations of interacting entities where the overall system behavior is not predefined but rather emerges through the interactions of its entities (Kim & Kaplan, 2006, p. 37).

The Cynefin framework distinguishes between order (simple and complicated), unorder (complexity and chaos), and disorder)and uses these distinctions to match problems and their contexts, with the methods, tools, and techniques that lead to solutions (Hasan, Helen & Alanah Kazlauskas, 2014).

5 Domains to Encounter Complexity and Deliver Effective Decision-Making

In order to create an adaptive environment in their business model, business leaders should have allowed the group flexible and self-directed arrangements more suited to unorder and complexity (Hasan, Helen & Alanah Kazlauskas. 2014). Business leaders can avoid problems that arise when their preferred management style causes them to make poor judgments by using the Cynefin Framework to help them perceive the context in which they are operating. The Cynefin Framework categorizes the issues that business leaders face into five domains based on how cause and effect relationships differ. Four of them, obvious, complicated, complex, and chaotic, require leaders to assess circumstances and take necessary action. When it is difficult to determine which of the other four settings predominates, the fifth category, disorder, applies. Disorder signifies uncontrolled situations and unsure of which situations businesses are in. The definition of each domain will be defined in the next section.

Obvious

The Obvious domain represents the known conditions, where rules are obvious, the situation is stable, and the relationship between cause and effect is clear. The framework recommends "sense-categorize-respond": establish the facts ("sense"), categorize, then respond by the following rules or applying best practices (Snowden and Boone. 2007).

Complicated

The Complicated domain represents the condition where cause and effect require analysis or expertise and there are various correct responses to some problems occurring. The framework recommends "sense-analyze-respond" assessing the facts, analyzing, and applying the appropriate good operating practice (Snowden and Boone. 2007).

Complex

The Complex Domain represents the unknown situation, where cause and effect can only deducted in retrospect and there are no right answers. The framework recommends "probe-sense-respond" where business leaders take an adaptive work approach to change the situation in unpredictable ways. Because of this, leaders should exercise patience and let the best course of action emerge rather than attempting to enforce one. They must first probe, then sense, and respond.

Chaotic

The Chaotic domain represents the situation where the environment is too confusing to wait for a knowledge-based response and requires immediate actions to resolve the problems. According to Snowden and Boone (2007), in the chaotic domain, a leader's immediate job is not to discover patterns but to staunch the bleeding. A leader must first act to establish order, then sense where stability is present and from where it is absent, and then respond by working to transform the situation from chaos to complexity, where the identification of emerging patterns can both help prevent future crises and discern new opportunities.

Disorder

The Disorder domain represents situations where there is no clarity about which of the other domains apply. In order to move to a known domain and subsequently take the right action. The best method to deal with the disorder is to start by dissecting the problem into smaller issues, apply the issues once more to one of the four categories, and then start working on a solution. Always be on the lookout for chaotic issues since it can be dangerous when issues go unresolved and there is no system in place to fix them. The focus should be on finding a way to enter a recognized category.